Keystone pipeline spill pushes up oil price

The shutdown of the Keystone pipeline following an oil spill has lifted crude oil prices to levels not seen in two and a half years.

Last week's leak and shutdown of the Keystone pipeline have raised concerns about this vital source of supply, causing oil prices to jump 2% on Wednesday, touching US$58.09 a barrel, the highest since July 2015.

About 5000 bbls of oil, or roughly 210 000 gal., spilled in South Dakota after the leak last Thursday. The pipeline is a key artery that carries crude into the United States from the oil sands of Alberta.

Traders are braced for lower supplies from Canada.

A manager with the South Dakota Department of Environment and Natural Resources told press that the clean up will take several weeks, suggesting that pipeline flow will continue to be curtailed.

“With no timeline for restart, expect roughly 4 million bbls/week of Canadian imports to be backed out,” TAC Energy, a fuel wholesaler, said in a note to customers.

The news pushed the price of West Texas Intermediate, the US oil benchmark, to a 28 month high of US$58.09 a barrel, up 2.2% on the day. The price of WTI for prompt delivery also rose in comparison to contracts for future delivery, suggesting traders were scrambling to obtain immediate supplies.